Case 2:13-cv-01702-SFC-RSW ECF No. 261 filed 09/30/20 PageID.8763 Page 1 of 12
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`_________________________________
`
`MASTER FILE NO. 12-md-02311
`IN RE AUTOMOTIVE PARTS
`ANTITRUST LITIGATION HONORABLE SEAN F. COX
`
`_________________________________
`
`Case No. 12-cv-00102
`In re: AUTOMOTIVE WIRE HARNESSES
`Case No. 12-cv-00202
`In re: INSTRUMENT PANEL CLUSTERS
`Case No. 12-cv-00302
`In re: FUEL SENDERS
`Case No. 12-cv-00402
`In re: HEATER CONTROL PANELS
`In re: BEARINGS Case No. 12-cv-00502
`In re: OCCUPANT SAFETY SYSTEMS
`Case No. 12-cv-00602
`In re: ALTERNATORS
`Case No. 12-cv-00702
`In re: ANTI-VIBRATION RUBBER PARTS Case No. 12-cv-00802
`In re: WINDSHIELD WIPERS
`Case No. 12-cv-00902
`In re: RADIATORS
`Case No. 12-cv-01002
`In re: STARTERS
`Case No. 12-cv-01102
`In re: AUTOMOTIVE LAMPS
`Case No. 12-cv-01202
`In re: SWITCHES
`Case No. 12-cv-01302
`In re: IGNITION COILS
`Case No. 12-cv-01402
`In re: MOTOR GENERATORS
`Case No. 12-cv-01502
`In re: STEERING ANGLE SENSORS
`Case No. 12-cv-01602
`In re: HID BALLASTS
`Case No. 12-cv-01702
`In re: INVERTERS
`Case No. 12-cv-01802
`In re: ELECTRONIC POWERED STEERING Case No. 12-cv-01902
` ASSEMBLIES
`Case No. 12-cv-02002
`In re: AIR FLOW METERS
`Case No. 12-cv-02102
`In re: FAN MOTORS
`Case No. 12-cv-02202
`In re: FUEL INJECTION SYSTEMS
`Case No. 12-cv-02302
`In re: POWER WINDOW MOTORS
`In re: AUTOMATIC TRANSMISSION FLUID Case No. 12-cv-02402
` WARMERS
`In re: VALVE TIMING CONTROL DEVICES Case No. 12-cv-02502
`In re: ELECTRONIC THROTTLE BODIES Case No. 12-cv-02602
`In re: AIR CONDITIONING SYSTEMS
`Case No. 12-cv-02702
`In re: WINDSHIELD WASHERS
`Case No. 12-cv-02802
`In re: CONSTANT VELOCITY JOINT BOOTS Case No. 12-cv-02902
`In re: SPARK PLUGS
`Case No. 12-cv-03002
`In re: AUTOMOTIVE HOSES
`Case No. 12-cv-03202
`In re: SHOCK ABSORBERS
`Case No. 12-cv-03302
`In re: BODY SEALING PRODUCTS
`Case No. 12-cv-03402
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`

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`Case 2:13-cv-01702-SFC-RSW ECF No. 261 filed 09/30/20 PageID.8764 Page 2 of 12
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`In re: INTERIOR TRIM PRODUCTS Case No. 12-cv-03502
`
`In re: BRAKE HOSES
`Case No. 12-cv-03602
`In re: EXHAUST SYSTEMS
`Case No. 12-cv-03702
`In re: CERAMIC SUBSTRATES
`Case No. 12-cv-03802
`In re: POWER WINDOW SWITCHES
`Case No. 12-cv-03902
`In re: AUTOMOTIVE STEEL TUBES
`Case No. 12-cv-04002
`In re: ACCESS MECHANISMS
`Case No. 12-cv-04102
`In re: MINIMODULES
`Case No. 12-cv-04302
`In re: SIDE DOOR LATCHES
`Case No. 17-cv-13005
`
`
`THIS DOCUMENT RELATES TO:
` Automobile Dealership Actions
`
`
`OPINION AND ORDER DENYING CERTAIN AUTOMOBILE DEALERSHIP
`SETTLEMENT CLASS MEMBERS’ MOTION TO ENFORCE PLANS OF
`ALLOCATION WITH REGARD TO RESERVE FUND ELIGIBILITY
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`Before the Court is Automobile Dealership Settlement Class Members’
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`(“Members”) Motion to Enforce Plans of Allocation with Regard to Reserve Fund Eligibility
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`(See ECF No. 590 in 12-102). The Members include 35 Dealerships under the Wolfe
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`Automotive Group, Kings Nissan & Kings Infiniti, and Young Automotive Group LLC
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`umbrella. Members seek to share in the pro rata payment from the reserve funds set
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`forth in the Plans of Allocation, including those Settlements in which they were not
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`Claimants. The Court heard argument on September 22, 2020, and at the conclusion of
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`the hearing, took this matter under advisement. For the reasons that follow the Court
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`DENIES the motion.
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`I. FACTUAL AND PROCEDURAL BACKGROUND
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`Members purchased hundreds of thousands of new vehicles containing the
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`components parts at issue in this litigation. (See e.g. ECF No. 590 in 12-102, Attachment
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`1, Decl. of Emma K. Burton at ¶ 2). Although Members did not submit claims in the
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`Rounds 1 and 2 Settlements, they submitted valid Proofs of Claim prior to the January 21,
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`2019, Round 3 Settlements filing deadline. (Burton Decl. ¶¶ 3-5). The Claims
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`Administrator processed and approved Members’ claims in Round 3.
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`According to the Declaration of Scott DiCarlo, the Senior Project Manager with the
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`Claims Administrator, (ECF No. 593 in 12-102), ,Round 1 Settlements resulted in
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`approximately $58 million from 23 separate settlement classes arising from settlements
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`with 10 defendants. (ECF No. 397 in 12-102). For example, Defendant Hitachi
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`Automotive Systems, Ltd.’s settlement involved nine parts and, therefore, nine different
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`settlement classes. (See e.g. Notice of Motion and Memorandum of Law in Support for
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`Preliminary Approval of Proposed Settlement with Hitachi Automotive Systems, Ltd.
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`and Provisional Certification of Settlement Classes, 2:12-cv-00702, ECF Doc. No. 35,
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`Attach. 1 - Settlement Agreement (E.D. Mich. Apr. 3, 2015). Moreover, the class periods
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`identified for each of the Hitachi Round One settlement classes differ from settlement
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`classes in other settlements because each settlement is based on factors relating to the
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`defendant, parts, and conduct at issue. Id. Pursuant to the court-approved notice,
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`dealerships had until March 31, 2016, to file a valid proofs of claim.
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`The notices authorized by the Court for the Round One settlements alerted
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`automobile dealerships that they would only share in those settlements if they filed a valid
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`Proof of Claim by March 31, 2016:
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`To remain in the Settlement Classes, you do not need to take any further
`action at this time. However, to share in the Settlement Funds, your
`dealership will be required to submit a Proof of Claim form that will be
`available on the Settlement Website at www.AutoDealerSettlement.com,
`and to submit it by March 31, 2016 (for more information see Question 8,
`below). If you choose this option, your dealership will share in the net
`proceeds of the proposed Settlements if its Proof of Claim is timely, valid,
`and your dealership is entitled to a distribution under the Plans of Allocation
`(described below in response to Question No. 9) and if and to the extent
`that the proposed Settlements are approved by the Court. Your dealership
`will be bound by the judgment and release to be entered by the Court as
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`described below (the “Judgment”). To be valid, your dealership’s request
`must contain the information required by the Proof of Claim form and be
`postmarked, or submitted electronically, by March 31, 2016.
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`(See e.g. 2:12-cv-00102, ECF Doc. No. 394, p. 4). The notice clearly informs the
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`recipients that sharing in the settlement proceeds requires a timely Proof of Claim.
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`Round 2 Settlements involved 40 separate classes, 10 defendants, and
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`$125,000,000. To participate in the Round Two Settlements, dealerships were required
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`to file a Proof of Claim by April 28, 2017. The notice that follows instructed dealerships
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`how to proceed using the same language used in Round 1, and set a submission date of
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`April 28, 2017. It likewise informed class members, “In order to receive payment, you
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`need to file a valid claim.” (See ECF No. 503 at 3 in 12-102, Order Authorizing
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`Dissemination of Class Notice and Scheduling Hearing for Final Approval of
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`Settlements; ECF No. 499 at 29, Motion for Final Approval of Settlements (Second
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`Group).
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`In sum, each settlement with a Defendant resulted in one or more settlement
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`classes because each part sold by a Settling Defendant created a separate settlement
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`class. (See e.g. Doc. No. 397 p. 15 in 12-102). Also the class periods identified in the
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`settlement classes were not uniform. Because of the large number of settlements as well
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`as the number of Defendants in this litigation, Class Counsel opted to defer notice and
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`the corresponding claims process until Class Counsel determined that an appropriate
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`number of settlements occurred. Only after multiple settlements were reached did Class
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`Counsel request leave to provide notice.
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`This procedure, which was approved by the Court, kept expenses lower.
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`Moreover, under the settlement plans approved by the Court, after class members
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`submitted claims they were permitted to “rely on that Proof of Claim and do nothing
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`further to participate” in future settlements with Defendants. Consequently, claims
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`submitted in earlier rounds were automatically processed in subsequent rounds.
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`To date, settlements have been aggregated four times with four corresponding
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`notice periods. With each round of settlements, Class Counsel requested that reserve
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`funds be set aside “for future allocation and distribution to eligible Settlement Class
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`members.” (See ECF No. 519-1 in 12-101 at 78). The reserve funds were created to
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`account for “information not currently available about affected, parts, models, and
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`brands,” and any funds not needed for the stated purpose would be “distributed on a pro
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`rata basis to members of the Settlement Classes in their respective cases.” (ECF No.
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`443 in 12-102).
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`After Class Counsel requested permission to distribute the reserve funds from the
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`first three rounds of settlements, Members contacted Class Counsel and the Claims
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`Administrator regarding the distribution. (ECF No. 590 in 12-102, Decl. of Emma K.
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`Barton, ¶¶ 8,9). A follow-up phone call between Members and the Claims Administrator
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`confirmed that it was not clear whether Members were eligible to receive reserve funds
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`from all the settlements, and the Claims Administrator offered to raise the reserve fund
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`eligibility with Class Counsel. (Id. Barton Decl. ¶ 9). On July 10, 2020, Class Counsel
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`notified Members that they were not eligible for reserve funds from Rounds 1 and 2
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`Settlements. Although subsequent discussions took place, the Members and Class
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`Counsel did not reach an agreement as to Members’ eligibility.
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`In sum, the parties disagree as to whether Members, as members of the
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`settlement classes in Rounds I and 2 Settlements that did not file claims and did not
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`receive any portion of the initial distribution, are entitled to receive a pro rata share of the
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`Reserve Funds.
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`II. ANALYSIS
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`A. Members Are Not Entitled to a Share of the Cumulative Reserve Funds for
`Which They Were Not Claimants Under the Allocation Plan
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`The parties disagree as to whether Members are entitled to distributions from the
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`Round 1 and Round 2 Settlement reserve funds, which have not yet been made.
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`Members contend that a plain reading of the Plans of Allocation shows that all class
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`members who submitted valid claims are entitled to their pro rata share of the cumulative
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`funds held in reserve. Because Members were identified as settlement class members1
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`and filed claims in Round 3 Settlements, they meet the definition. In contrast, Class
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`Counsel seeks to restrict reserve fund distribution to a particular round’s claimants.
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`The resolution of this dispute does not turn on whether Members were potential
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`class members in the first two Settlement Rounds. The court-approved notices advised
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`dealerships that they could only receive money from Round 1 and Round 2 Settlements if
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`they filed valid claims by the deadlines. Moreover, the Allocation Plans clearly state: “In
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`order to receive a payment, you need to file a valid claim.” Members likely had valid
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`claims, but they did not file them in accordance with the notices governing Rounds 1 and
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`2 Settlements. Moreover, Members did not and have not provided evidence to the Court
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`explaining why they failed to file timely proofs of claim. In short, the Court agrees with
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`Class Counsel that the allocation of the reserve funds turns on whether a class member
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`1Members also argue that Class Counsel use of the term–“class members,”
`rather than “claimants” supports their position. The Court disagrees. Class Counsel
`modified the term class member to include “eligible”. Moreover, had Class Counsel
`used claimant, the description would have to be modified by terms such as eligible or
`verified or timely. A claimant is anyone who files a claim, including claims that were
`unverified. The term would not allow anyone who filed a claim to partake in a share of
`the settlements.
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`filed claims in those particular settlements, and Class Counsel clearly represented that
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`when the reserve funds were distributed it would be to eligible Dealerships. (ECF No.
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`519 in 12-101). The reserve funds are not separate from the settlements–but a further
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`distribution of existing settlements, for which Members failed to file claims. The
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`aggregation of settlements into rounds created by Class Counsel does not alter the
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`essential facts.
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`B. Principles of Equity and Fairness Do Not Require Allocation of Reserve
` Funds to Members
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`The parties disagree as to whether Members’ claims to the reserve funds can be
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`characterized as late, and if they are, whether equitable distribution and the fiduciary duty
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`owed by Class Counsel to all class members regardless of timing issues requires
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`allocation of those reserve funds to Members. The Court discusses the arguments
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`below.
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`1. Timeliness of Claims
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`Members argue that their request for reserve funds is timely because (1) they
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`submitted timely claims in Rounds 3 and 4 Settlements, and (2) are not seeking
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`recompense from the distributions already made in Rounds 1 and 2 Settlements despite
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`being members. The argument falls flat.
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`The Court assesses whether claims are late in terms of compliance with claims
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`deadlines. Here, Members did not file proofs of claim in the Round 1 Settlements. The
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`deadline–March 31, 2016, has long since passed. Likewise, the Round 2 Settlements
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`required proofs of claim to be filed by a deadline long since passed–April 28, 2017.
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`Although the settlement plans allowed class members submitting claims to rely on their
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`proof of claim in future settlements with Defendants, as they were processed
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`automatically, there is nothing in the settlement plans that would allow a proof of claim in
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`a latter round to relate back to an earlier settlement. Therefore, the Court finds Members’
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`claims to reserve funds from Rounds 1 and 2 Settlements are late.
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`2. Equitable Considerations
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`The parties next argue whether Members should participate in the distribution of
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`reserve funds regardless of timing issues. Members assert that given the method by
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`which settlement rounds were established, the fiduciary duty owed to Members by Class
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`Counsel, and the lack of any resulting prejudice to class members, equities favor allowing
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`Members’ participation. Class Counsel argues that the circumstances of this case
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`undermine any argument that Members should participate in the distribution of reserve
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`funds based on equity and fairness.
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`The Supreme Court held that in deciding whether to accept late claims, courts
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`consider “all relevant circumstances” including the danger of prejudice to other class
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`members, the length of the delay and effect on judicial proceedings, the reason for the
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`delay, and whether the late claimant acted in good faith. Pioneer Inv. Servs. v. Brunswick
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`Assoc. Ltd., 507 U.S. 380, 395 (1993).
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`After considering all of the circumstances and case law relevant to the resolution
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`of Members’ position, the Court concludes that there is no justification for the delay and
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`allowing Members to participate in the distribution of the reserve funds from Rounds 1
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`and 2 would prejudice class members. In In re Dairy Farmers of Am., Inc. Cheese
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`Antitrust Litig., No. 09-3690 (N. D. Ill. 2016), for example, the class counsel supported
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`allowing nine late-filed claims because the claims processing would not be delayed, and
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`the claims were filed within weeks to several months of the deadline. In contrast, DiCarlo,
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`a Senior Project Manager for the Claims Administrator, has represented that the delay
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`here could last 18 months and would preclude distribution of any money from any
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`settlement until every claim was processed. (DiCarlo Decl. ¶ 24). DiCarlo’s detailed
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`description of the process by which the allocation plans were used to calculate the pro
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`rata shares of dealerships that filed claims, and the painstaking process for valuing the
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`claims is uncontested. (DiCarlo Decl., ¶¶ 20, 21). The administrative costs would
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`necessarily increase if Members were allowed to participate. In addition, the delay by
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`Members here was not months, but years.
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`The late claim allowed in In re Orthopedic Bone Screw Prods. Liab. Litig., 246 F.3d
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`315, 319-20 (3d Cir. 2001), involved a potential member who did not learn of the
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`settlement in time to file the initial registration as required by the claim process, but did
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`file a timely proof of claim. The court allowed the claim, and 100 similar claims, observing
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`that the claims constituted “a minuscule fraction of the total settlement class,” that the
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`inclusion was not prejudicial because the administration and distribution were still
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`underway, and the inclusion would neither disrupt nor delay the process. The court
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`further found that the individual showed excusable neglect and good faith because he
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`had not received direct notice. Id. at 328-29. Again, in the case before this Court,
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`Members did not file timely proofs of claim in Rounds 1 and 2, and the evidence
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`demonstrates that Members received multiple copies of the Round 1 and Round 2
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`Settlement notices via email and hard copy. (ECF No. 593 in 12-102, Class Counsels’
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`Response Brief, DiCarlo Decl. ¶¶ 32-34). Members do not contend otherwise.2
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`2In fact, the Claims Administrator, KCC, identified at least 96 Round 1 settlement
`emails sent to employees of the Wolf Automotive Group, including managers,
`executives, salespeople, and others on September 15, 2015. All were delivered
`successfully. KCC sent 96 Round 2 Settlement notices on September 9, 2016, but 14
`were bounced. KCC then mailed notices to 7 of the 21 listed Wolfe Automotive Group
`dealers in Rounds 1 and 2. (DiCarlo Decl. ¶ 32). KCC identified emails sent to 8
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`9
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`The late claims filed and allowed by the court in In re Agent Orange Prod. Liab.
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`Litig., 69 F. Supp. 1250, 1263 (E.D. N.Y. 1988), caused no significant administrative
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`costs, and that court found that late claims would be “de minimus” compared to timely
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`claims. In contrast, here, the number of eligible class members would increase
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`dramatically, by 1500, because just over 3400 Dealership class members submitted
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`claims in Round 1 whereas approximately 5000 submitted claims in Round 3. The Court
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`does not find the increase de minimis; it could result in an increase of 50%, depending on
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`how the number of claims and dealerships are calculated. (DiCarlo Decl. ¶ 25).
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`In addition to the distinctions between the matter at hand and those addressed by
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`the cases cited above, the Court recognizes that the reserves were created to account for
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`potential changes to the allocation based upon new information about parts and models
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`targeted by the conspiracies, not as a back-up to cover late claims. (See DiCarlo Decl. ¶
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`2); See also ECF No. 394-1, pp 5-9 in 12-102). Class Counsel made clear that “In the
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`event and to the extent that the reserve fund is not needed to cover payments described
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`above, any funds remaining in the reserve fund after future allocations will be paid to
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`eligible dealerships based on their pro rata share of the settlement funds and the eligible
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`claims filed.” Nothing in the reserve fund explanation to the Court suggests that they
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`were created to account for the situation in which Members find themselves.
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`employees of Young Automotive Group LLC regarding Round 1 Settlement, which were
`delivered successfully. KCC successfully emailed notice of Round 2 Settlements to 21
`employees; eight successfully. KCC mailed paper notice to 8 dealerships in both
`Rounds. The same occurred regarding Kings Nissan and Kings Infiniti, Inc.: 26 emails
`were successfully delivered in Round 1, and 3 emails in Round 2. Paper notices were
`also sent to both dealerships. (Id. at ¶ 34).
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`Nor does the Court find Class Counsel has violated its fiduciary duty to protect all
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`class members’ interests by arguing against Members. Members contend that Class
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`Counsel is protecting early filers at Members’ expense, arguing that Class Counsel has
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`measured Members’ interests against so-called “early filers.” Members mischaracterize
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`the status of eligible dealerships in Rounds 1 and 2 Settlements–they are timely filers, not
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`early filers. Moreover, reserve funds were put in escrow years ago with the stated
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`purpose of allowing dealerships with timely proofs of claim to receive an initial advance.
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`Considering the amount of time that has passed between the claims deadlines in Rounds
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`1 and 2, and distribution of the reserves, as well as the purpose of the reserve funds, the
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`Court rejects Members’ position that Class Counsel is not meeting their fiduciary duty to
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`class members. Notably, Class Counsel does not take the position that eligible class
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`members have some justifiable expectation to a particular payout and would be
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`prejudiced on that basis by approval of Members’ late claims. Their position turns on
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`factors such as the lack of evidence that Members pursued their claims diligently.
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`Deadlines are necessary for finality, and here ignoring those deadlines would delay
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`distribution 18 months or more and increase administrative costs. DiCarlo has
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`represented to the Court that a distribution of the reserve funds was in the works, likely to
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`occur within a month. The claims already have been reviewed, validated, and tabulated.
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`The equities do not favor Members, who are not unsophisticated consumers and have not
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`even provided an explanation for their delay. They certainly have not established good
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`cause for the position in which they find themselves.
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`III. CONCLUSION
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`The plan language of the Allocation Plans limited participation in the settlements to
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`those class members that filed timely and valid claims. The equities here do not favor
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`opening the reserve funds to Members relative to Rounds 1 and 2 Settlements.
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`Therefore, the Court DENIES Members’ motion.
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`IT IS SO ORDERED.
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`Dated: September 30, 2020 s/Sean F. Cox
`Sean F. Cox
` U. S. District Judge
`
`12
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